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About this blog: The Raucous Caucus shares the southpaw perspectives of this Boomer on the state of the nation, the world, and, sometimes, other stuff. I enjoy crafting it to keep current, and occasionally to rant on some issue I care about deeply... (More)

About this blog: The Raucous Caucus shares the southpaw perspectives of this Boomer on the state of the nation, the world, and, sometimes, other stuff. I enjoy crafting it to keep current, and occasionally to rant on some issue I care about deeply. My long, strange career trip has included law and management jobs in two Fortune 50 companies, before founding the legal search and staffing firm Cushing Group, Recruiters. I've lectured on negotiation and settlement strategy, and teach graduate courses at Golden Gate University (Adjunct of the Year for a doctoral seminar on business, law and society). Illinois, Texas and California (Inactive) admitted me to law practice; I hold JD and MBA degrees from the University of Illinois, and a BGS from the University of Michigan, with Distinction. There -- Go Blue! Personally, my daughters are a lawyer in NY, and a pre-med student in NM - their lives-and-times often animate these columns. I'm active in animal advocacy matters, having led a citizen team that took Alameda's city animal shelter to a non-profit operation - we saved $600K annually and the lives of some 700 companion animals/year vs. the City's best alternative. I'm delighted with that success. My family has re-homed 144 foster animals over many years; we host four boisterous border collies of our own. Mostly for humane movement efforts, I was nominated for GQ magazine's 2009 Better Men, Better World Award. You may notice that many of my rants relate to critter issues. In addition to the Raucous Caucus blog, I frequently contribute to The BARK magazine, and am a proud Moderator emeritus on the popular news and humor website www.Fark.com. I prefer scotch over imported beer (Hide)

Look for the Socialist Label?

Uploaded: Oct 26, 2015

Last time, we considered just what kind of a socialist Bernie Sanders really is. We concluded that heâ€™s a pretty tepid comrade in those arms.

While his policies certainly appear on the southpaw side of the more liberal Party bench, they advocate vigorous tinkerings with our mixed economy, rather than wholesale replacement of its capitalist portion with government institutions. So the questions become: why embrace that label, and now that he has our attention, whatâ€™s next for the Senator from Vermont?

Why does that socialist label matter? After all, as recently as June of this year, a Gallup poll revealed that Americans are much more accepting of various characteristics in their candidates than has traditionally been the case. Thus, those who witnessed the 1960 whispering campaign against JFK (who might be controlled by The Vatican) may be surprised to learn that 93% of the electorate would not be swayed against a Catholic candidate by reason of that faith.

Candidates identified as black, female, Jewish, or Hispanic were also in the 90s%, with Mormon at 81%, and gay (74%) all doing pretty well, too, at least publicly (remember the Bradley Effect?). Muslims trailed at about 60%, Ben Carson notwithstanding, but they still led atheists by 2%. Younger voters, as usual, cared less about any of those status factors than did their elders.

All that said, socialists trailed the pack at only 47% who would even consider voting for one. So thatâ€™s why it matters.*

I think there are at least three reasons why Sanders embraces the term, rather than softening it in some kind of move toward the center of the electorate. First, he knows itâ€™ll be hung on him, anyway. He has an inescapable resume that includes membership in socialistic organizations during his time at University of Chicago, in his rather colorful youth of the 1960s. Since that time, he has never disavowed it, so call this getting out in-front of the issue, which Olivia Pope and every other politico worth the salt would advise.

On the flipside of that coin, a big part of Sandersâ€™ appeal is his genuineness â€“ nobody would ever accuse him of being brought out of central casting in a way of a Mitt Romney or former MD Governor Martin Oâ€™Malley. Heâ€™s rumpled, bespectacled and homely, and his hair betrays only recent and tentative familiarity with a comb. But heâ€™s real, and part of that means that he continues to accept the union label heâ€™s worn proudly his entire adult life.

Second, Sanders recognizes that for his campaign to win, he really does have to rally his troops into something akin to the Revolution he often talks about. He not only needs a huge turn-out to overcome the pesky label, but his proposals are not doable by fiat â€“ he needs long coattails to form a Democratic Congress. Only then can his ambitious agenda be realized. He wants his differences to be seen as features, rather than bugs, in a sea change election â€“ thatâ€™s the only way it works for him: to be very, very different from the norm.

Finally, I will guess that heâ€™s privately astounded at what his campaign has wrought, so far. He got in as the most quixotic figure since, well, don Quixote, and then he caught fire. He will tilt at as many windmills as heâ€™s able, now that he has achieved center stage. It simply may not have occurred to him that this scenario might come to pass, but here we are.

Lest that third point seem far-fetched, Iâ€™d offer this thought. To me, in recent weeks the Sanders campaign has lost a bit of steam. Many supporters think he won the first Dem debate, but I do not. Candidate Clinton had absorbed some doubts based on a lay-low strategy during her email tribulations.

But she has come out swinging, and connecting with those who may have begun to waver. Dems have been generally pleased with her performance (which it may be) â€“ on the talkies leading-up to the debate, on the Las Vegas stage, and in routing the GOP inquisitors last week. It was telling that her opponents were reduced to posting unrelated, unflattering photos, complete with fictional captions, on social media over the weekend. Sheâ€™s clearly having the time of her life.

Bernie OTOH, seemed a bit tired and nearly offended at the tone of the debate questions. He missed chances. He has also steadfastly refused to run-the-numbers that would detail where the money will come from to fund his many initiatives. A tax on securities sales: okay, how big and how much will it raise? A higher income tax â€˜fair shareâ€™ on the wealthy: okay, but again, these are calculations that can be made, and should firmly underlie the promises, before theyâ€™re made. Iâ€™m not sure they were, in fact, made in advance â€“ perhaps nobody thought heâ€™d get this far â€“ and they really do need to be rolled-out soon.

After all, Somebody has to pay for the revolution.

* it's not clear what happens when you combine those characteristics, e.g., Bernie is a socialist and Jewish -- does that mean his current ceiling is .47 x .91 = 43%?) I'm guessing not, but it makes for some interesting calculations.

Posted by Rajiv,
a resident of another community,
on Oct 26, 2015 at 7:20 pm

To understand how Senator Sanders' programs are to be paid for, you really have to look at the work of Stephanie Kelton, currently the Chief Economist for the Democratic Minority Staff of the Senate Budget Committee for which Senator Sanders is the ranking member. She also happens to be an adviser to Senator Sanders. She is also a leading proponent of "Modern Monetary Theory"

To see a very lucid introduction to MMT you can look at Warren Mosler's "The 7 Deadly Innocent Frauds of Economic Policy" Web Link

Posted by Tom Cushing,
a resident of Alamo,
on Oct 27, 2015 at 10:49 am

Roz -- looks like all the thunder is over your way. Happy commenting!

Rajiv -- thanks for the link. I do have difficulty with MMT and printing 'free' money, because I think the macro-effects will be runaway inflation based on too many politicians with too many good ideas about how to spend that free money. I like that the tie exerts some discipline on spending instincts.

Estimates of Sanders' program costs are as high as $18T, a truly ridiculous sum from the WSJ alarmists and their grindy axe. But estimates about revenue, too, are all over the map -- we need some clarity and for the candidate himself to start owning some numbers. Unfortunately, journalists are generally bad at math and disinclined to attempt those calculations, so we lack credible figures, responsibly rendered.

Posted by Rajiv,
a resident of another community,
on Oct 27, 2015 at 12:14 pm

Tom,

The key thing to realize about MMT is that money is created by Government spending, and destroyed by taxation. Hence taxation is NOT a source of revenue for the Government spending, but rather is to be used for two purposes - the first is to control inflation, and the second to reduce imbalances and bad behavior in economic actions. In the MMT world, and from the macroeconomic identities, Government deficits have to equal private sector savings. So you have to look at spending and taxation policy from that angle. So if you reduce Government debt, private sector savings have to be reduced by definition. The whole thing becomes much clearer if you always make an assumption that money is always a debt instrument, and serves to keep score of unredeemed debt. This is the entire basis of double entry accounting.

If we look at Saez (local UCB) and Picketty's work, it is very clear that income inequality began changing in the late 1960's, and accelerated after Reagan got elected. There were some key taxation changes that occurred at those two inflection points. There was the reduction of top income tax rates from 95% to 70% by Johnson, and then the reduction of those rates down to 35% by Reagan. These in my opinion, have been the basis for the changes in wealth and income inequality over the last 50 years.

I believe, that the Sanders spending and taxation policies when looked through the above lens, adequately address the issues. Top tax brackets will be increased. The Tobin tax (on financial transactions) is a good thing (not so much from what revenue it can raise, but in that it will reduce market volatility, and reduce the probability of market crashes - there are some other possible mechanisms to achieve these kinds of objectives, but the one proposed is a good one)

But of course, more policy changes should come out as we get further into the campaign. Another good site to learn about MMT is the NewEconomicPerspectives.org and you can look at the MMT primer there.

Posted by Hotslide,
a resident of Oak Tree Acres,
on Oct 29, 2015 at 9:01 am

Rajiv: Some very short-sighted views for sure. To infer that income inequality began in the 60's and is mostly due to taxation changes, without consideration to the huge demographic changes is perplexing. Every large city has a vast section of souls hooked on uncle sugar's handouts and that pool continues to grow. Not because of taxing issues but the decline in morality and the breakup of the family. And the statement that taxation is not a source for government spending ? What ? And when you look at Bernies financial game plan through any lens you will see written on the wall "BUST". I always get irritated when people go back 50-100 years and try to apply monetary principals in play then with the current state of the world, without consideration of the massive changes that people and countries have undergone.

Posted by Ed,
a resident of Pleasanton Meadows,
on Oct 29, 2015 at 10:37 am

@Hotslide - yep, hippies and liberalism ruined everything in the 60's, and we haven't recovered and may never do so. The break was centered on the protest of the Vietnam war, which we shouldn't have gotten involved in in the first place.
Now no one knows what's the right thing to do anymore, although we can feel inside what's right and what's wrong instinctively. That's why Trump is refreshing. I may not agree with a lot of what he says, but he speaks to that little voice inside of me that has been covered up and trampled upon by liberalism all these years.

Posted by Rajiv,
a resident of another community,
on Oct 29, 2015 at 3:55 pm

@hotslide - According to the 2015 Paper by Kindermann and Krueger that looked at income inequality and top marginal rates. The authors persuasively argued, that "the marginal tax rates for top 1% earners of close to 90% are optimal as long as the earnings and wealth distributions display a degree of concentration as observed in US data." The paper can be found at Web Link - This conclusion appears reflect the views of many other labor economists. This also appears to correlate strongly with the effects of the reduction in the top marginal brackets the took place from the late 1960's till today.